Assets

2020

2019

Accounts receivable

30,000

14,000

Inventory

27,000

20,000

Equipment

60,000

78,000

Accumulated depreciationequipment

(29,000)

(24,000)

Total

$126,000

$108,000

Liabilities and Stockholders' Equity
Accounts payable	$ 24,000	$ 15,000
Income taxes payable	7,000	8,000
Bonds payable	27,000	33,000
Common stock	18,000	14,000
Retained earnings	50,000	38,000
Total	$126,000	$108,000

Nosker Company Income Statement For the Year Ended December 31, 2020
Sales revenue	$242,000
Cost of goods sold	175,000
Gross profit	67,000
Operating expenses	24,000
Income from operations	43,000
Interest expense	3,000
Income before income taxes	40,000
Income tax expense	8,000
Net income	$ 32,000

Prepare a statement of cash flowsindirect method, and compute free cash flow.

Nosker Company Comparative Balance Sheets December 31

Assets

2020

2019

Cash

$ 38,000

$ 20,000

Accounts receivable

30,000

14,000

Inventory

27,000

20,000

Equipment

60,000

78,000

Accumulated depreciationequipment

(29,000)

(24,000)

Total

$126,000

$108,000

Liabilities and Stockholders' Equity

Accounts payable

$ 24,000

$ 15,000

Income taxes payable

7,000

8,000

Bonds payable

27,000

33,000

Common stock

18,000

14,000

Retained earnings

50,000

38,000

Total

$126,000

$108,000

Nosker Company Income Statement For the Year Ended December 31, 2020

Sales revenue

$242,000

Cost of goods sold

175,000

Gross profit

67,000

Operating expenses

24,000

Income from operations

43,000

Interest expense

3,000

Income before income taxes

40,000

Income tax expense

8,000

Net income

$ 32,000

Additional data:

Dividends declared and paid were $20,000.

During the year, equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.

All depreciation expense, $14,500, is in the operating expenses.

All sales and purchases are on account.

Instructions

a.Prepare a statement of cash flows using the indirect method.

a. Cash from operating activities $31,500

b.Compute free cash flow.